Midterm #3, Dec 3 Answers

Midterm #3, Dec 3 Answers - Department of Economics, York...

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Department of Economics, York University ECON1000B: Principles of Microeconomics Midterm Test #3, December 3, 2010 Duration: 60 Minutes Aids Allowed: Non-programmable calculators only Only non-programmable calculators without substantial memory are permitted for this test. Any other calculator will be confiscated and academic consequences will result if it contains any data relevant to this course Put your answers on this test paper This total marks in this test are 50. The test is divided into two parts: Part I – diagrammatic/number format - is worth 42 marks (42 of the total mark of 50) Part II – explanations and multiple choice- is worth 8 marks (8 of the total mark of 50) (4 explanations questions and 4 multiple choice questions worth 1 mark each) SHOW YOUR WORK WHERE APPLICABLE . YOU MUST USE A PEN; PENCIL IS NOT ELIGIBLE FOR REMARKING Print your name and student number clearly on the front of the exam and on any loose pages. Name: _______________________________________ (Family Name) (Given Name) Student # : ______________________ There are 6 pages to the exam. - 1/6 -
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ECON1000B: Midterm Test #3, December 3, 2010 Part I: Place your answers (and work where necessary) in the space provided. Clearly label all axes, curves, and points. 1. Short-run Production Functions (4 marks) a) Draw the marginal product and average product of labour curves for a representative firm in the space below. Label the axes and label each curve clearly. (3 marks). 1 mark: correct designation of axes: Labour on the horizontal and Output/unit on vertical 1 mark: Marginal Product rises to a maximum from origin and then falls 1 mark Average Product rises to a maximum and then fall, cutting MP at max AP b) On your diagram, indicate the point where Marginal Cost is at a minimum. (1 mark) 1 mark: a point indicating max MP either at max MP or on the horizontal axis at max MP 2. Cost Functions (10 marks) a) Draw Marginal Cost (MC), Average Cost (AC), and Average Variable Cost (AVC) for a typical firm in the short-run. (3 marks) b) Assume that this is a competitive industry and that market price (Po) is above minimum Average Cost (P > AC). Show the output (qo) produced by the firm if the firm were to produce output. (2 marks) c) Show the economic profit or loss of the firm at this price if the firm were to produce output. (2 marks)
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Midterm #3, Dec 3 Answers - Department of Economics, York...

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